BenQ's Q3 profit plunges, but sees better Q4

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BenQ's Q3 profit plunges, but sees better Q4
TAIPEI (Reuters) - BenQ Corp, Taiwan's top maker of computer gear and mobile phones, posted a meagre third-quarter profit on Thursday that fell far short of market forecasts on disappointing mobile phone shipments.

But the company forecast sales doubling in the fourth quarter, which is the peak holiday season for consumer spending.

BenQ also expects to gain Siemens AG's handset revenue stream in the final quarter of the year, which would help boost sales to a record. Their merged handset unit, BenQ Mobile, began formal operations in October.

"Visibility of the fourth quarter is high and we can see record-high sales even without including Siemens," BenQ chief financial officer Eric Yu told an investor conference.

"Siemens is a plus," he said, adding handset operations would contribute about a half of fourth-quarter revenue, sharply higher than 7 percent in the third quarter.

BenQ earned a net profit of T$18 million in the third quarter, down sharply from T$1.37 billion a year ago and T$480 million in the second quarter. Seven analysts surveyed by Reuters Estimates had forecast T$692.3 million.

Sales stood at T$34.09 billion, down 15 percent from a year ago but up 15 percent from the previous three months.

The firm plans to launch 10 new mobile phone models under both BenQ and Siemens brands in the fourth quarter, which BenQ Mobile chief executive Clemens Joos said would help stablise its average selling prices.

Joos told Reuters earlier this month new orders at BenQ Mobile almost doubled last quarter, after the Taiwan firm agreed in June to take the loss-making business over from Siemens.

He said he would rather focus on sophisticated mobile phones with high profit margins than selling cheap handsets to climb up the list of global rankings.

Pricing pressure

"It will still take some time to see whether BenQ Mobile will break even as the company expects," said Vincent Liao, a technology analyst at KGI Securities. "I don't have doubts on growth of the top line, but the bottom line is a question mark."

In countries where the BenQ handset brand was not yet known, the company would continue using the Siemens name for 18 months. After that, it would switch to a new joint BenQ/Siemens logo.

As competition keeps margins tight across its sub-contracting business, BenQ has said it would sell more of its own brand of mobile phones, laptop computers, projectors and LCD TVs. Own-brand goods make up about a third of BenQ's sales.

BenQ said fourth-quarter laptop shipments would rise 20-30 percent sequentially, while shipments of LCD TVs were seen up 50 percent. It gave no output estimates for handsets.

The firm said it made an operating loss of T$300 million in the July-September period, compared with the year-earlier T$560 million profit and a T$640 million shortfall in the second quarter.

The company had benefitted from non-operating income, including stock investments, in the second quarter. Third-quarter non-operating income came to T$390 million, BenQ said.

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